It states that the 2010 Retirement Confidence Survey finds that the “record low confidence levels measured during the past two years of economic decline appear to have bottomed out. The percentage of workers very confident about having enough money for comfortable retirement has stabilized at 16%,” which is compared to the 20-year low of 13% measured in 2009.

This is odd if you take into account the fact that the survey finds that more respondents’ retirement preparations are still eroding, more have no savings at all and are clueless about savings goals, and more Americans are expected to work longer.

Could all this confidence in retirement savings be the cause of extreme denial or, possibly, just arrogant naivety?

In other retirement savings news, the United States Department of Labor proposed a new rule that aims to protect and increase retirement savings.

As The New York Times reported:

“These rules will strengthen America’s private retirement system by ensuring workers get good, objective information,” Seth Harris, deputy labor secretary, said in a statement. “When that happens, workers make the kind of decisions that are good for their families and the nation as the whole.”

Could the proposed rule and the confidence level be related?

We were all thrilled with the spectacle of the just-completed 2010 Olympic Winter Games from Vancouver. Winter sports are known for their inherent high levels of riskiness, so it should not be too surprising that some valuable lessons related to “personal risk management behavior” can be drawn from the way the athletes make decisions and how the competitions are conducted and judged. As risk professionals, when we watch the action on the snowy mountains and icy rinks, we can get another view on the choices made in the taking of risk or in mitigating risk. Here are just a few lessons that offer additional insights:

• Risk reward tradeoff in men’s figure skating. The most notable example being the quadruple jump. The new scoring system provides more points for a successful quadruple jump than, for example, a triple axel. The number of additional points, however, is marginal. Most skaters felt the additional reward did not match the increased risk of failing to execute the more difficult jump. Gold medalist Evan Lysacek opted not to do it, much to the chagrin of silver medalist Evgeni Plushenko, who did put in a quad. The lesson here: the scoring system drives behavior.

• Peer pressure leading to excessive risk taking in freestyle ski moguls and downhill ski. In order to contend for a medal in moguls, skiers needed to balance high speeds, precise turns and spectacular jumps. One skier’s results could lead subsequent skiers to modify jump choices or speed based on what they perceived to be necessary to win a medal. We also saw this in the women’s downhill, where eventual gold medalist Lindsey Vonn’s impressive time had two knock-on effects. First, many of the skiers who followed her crashed in their effort to match her time. Then the final skier, Maria Riesch of Germany, a gold medal favorite, was so intimidated by the crashes that she skied tentatively to an eighth place finish. The lesson: peer behavior can lead to excessive risk taking.

• Judging risk-based performance in freestyle ski moguls. Judges need to essentially quantify the qualitative. Judgment decisions are based on a combination of speed measurement (objective), turning quality (subjective), and aerials (subjective and objective). Assessment of aerials is based on the execution of the chosen trick. Each trick has an assigned degree of difficulty, and the overall weighting among the three categories is set beforehand. This provides a good framework for making risk preference / appetite decisions. Choose a set of independent factors, measure what can be measured (speed) or adopt a scale. For scaled factors, use multiple assessments (judges) and hedge against outliers (average the scores of multiple judges). Also, regularly review the scoring to ensure appropriateness and get feedback. The lesson: we CAN develop a scientific system for making decisions using expert judgment.

Sports provide us with benchmarks, analogues and evidence to illuminate the way the human mind deals with risk and reward. Applying this understanding to the rationale for companies’ risk decisions demonstrates that some actions may not be in the companies’ best interests. They may be driven by pressures to “perform” and to “follow the pack.” We were all thrilled with the spectacle of the just-completed 2010 Olympic Winter Games from Vancouver.

Spanish officials are calling it the world’s biggest network of virus-infected computers. That’s right — 13 million computers were hacked and infected with a program that allowed for the theft of personal and financial data of unwitting citizens worldwide, in what investigators have termed the “Mariposa botnet.”

The culprits? Three Spaniards, ages 31, 30 and 25 who were arrested last week in Spain’s northern Vizcaya province. During a search of their homes and computers, police found personal information from more than 800,000 users.

The suspects “copied personal and financial data of individuals, companies and official institutions in more than 190 countries,” the Civil Guards’ statement said. In addition to gaining illegal access to personal and financial information, the virus would have permitted those controlling the system to mount a large cyberattack from the infected computers, a U.S. official said.

Apparently, the hacking was first detected in May by Defence Intelligence, a Canadian firm that develops software to monitor incoming and outgoing transmissions of every computer on a corporate network.

The botnet [or, a network of computers infected with a virus that can be controlled remotely without owners' knowledge] included infected machines inside the offices of more than 40 major banks and a vast majority of the top companies on the Fortune 1000 index. Since its creation, Defence Intelligence has identified and helped to protect its customers against dozens of botnets and malicious software programs — with Mariposa botnet being the jewel in its crown.

Authorities are searching for a fourth suspect in this massive cybercrime. “Juan Salon of the Spanish Civil Guard’s cybercrime unit told reporters Wednesday investigators have learned the suspect’s Internet handle and that this person might be Venezuelan.”

Catastrophe modeling company EQECAT Inc. said insured damages from the quake could range from $3 billion to $8 billion, with economic losses ranging from $15 billion to $30 billion. Economic losses will continue to be updated as the ongoing assessment of infrastructure damage is confirmed. The company also said the speed of restoration of the transportation and utility networks will also determine the total amount of business interruption losses claimed.

Effects of the earthquake stretched from 115 miles north of the industrial city of Concepcion to the capital of Santiago — more than 325 miles away from the epicenter. “AIR Worldwide estimates that the value of insurable buildings in the quake zone is $275 billion, but very few of the structures are likely to have been insured. The company said that as little as 10% of residential buildings are believed to have been insured and about 60% of the commercial structures were insured.”

The Haitian earthquake and Chilean earthquake differ drastically in terms of insurance. Though the earthquake that struck Chile was approximately 500 times as powerful as the one that struck Haiti, Chile will recover more quickly because of it’s highly developed insurance market. In an article release today, Robert Hartwig, president of the Insurance Information Institute (I.I.I.) said that “in addition to a number of Chilean insurers, many large international insurers and reinsurers—mainly American and European—compete for business in that country, and will provide the financial resources for Chile’s reconstruction.” He contrasted the situation to that in Haiti, an area that Hartwig said has almost no private insurance market.

The I.I.I. shows the following table, titled the “10 most costly U.S. earthquakes (in millions).”

In the March issue of Risk Management, our editor, Jared Wade, takes an in-depth look at the catastrophe in Haiti and the future of natural disasters. A good read, I must say.

Changes to policy wording are most likely to be accepted during soft markets like the one that has existed over the past several years. Although in theory, underwriters price policies based on the specific risks being transferred via the actual policy, in practice, due to competition from other insurance companies, lack of effort or both, it is usually the case that requested changes to policy wording usually do not result in corresponding changes to premium. Essentially, the underwriter agrees to “throw in” the broadened coverage in order to keep the policyholder’s business.

For more about how to go about revising your policy in your favor, click here to read the full article on RMMagazine.com.

Faithful readers — it’s the moment you’ve (maybe?) been waiting for since last month’s issue of Risk Management was put online. The March issue is now available here.

Within it, you’ll find features focusing on Haiti and the future of disasters, brain injury recovery, ERM challenges and CEO succession planning. Also available are articles covering the compensation controversy, airport security, data hoarding and much more. Check out the digital edition, which offers stunning graphics and all the pleasures of the print edition right there on your computer screen. Please let us know if you have any questions or comment. Thanks for reading.

The tweet read: “Who said sleeping in a moldy apartment was bad for you? Horizon realty think it’s okay.” Those two sentences sparked the suit in which Horizon sought $50,000 in damages, mostly reputation-related. The case was eventually dismissed this past January, with the judge claiming the tweet was “too vague to meet the legal standards of libel.”

Though it was dismissed, this one lawsuit opened the door to Twitter-related legal action. Soon to follow? Most likely lawsuits related to Facebook posts. Not only can tweeting or posting about another company get you in trouble, doing the same about the company for which you work can also pose a risk. As an article on MainJustice.com states:

“Our board members are talking about things like Facebook and Twitter, so we are definitely paying attention to social media,” said Haydee Olinger, the chief compliance officer for McDonald’s Corporation. Grace Renbarger, the chief ethics and compliance officer for Dell Computer, said she is constantly worried that something her employees say on Facebook or Twitter could hurt the company. “You don’t want people out there saying things that could be attributed to the company for liability purposes,” Renbarger said.

Because of the risk social media poses, the role of the chief compliance officer has grown to encompass the occasional or, in some cases, often, monitoring of employee’s Facebook and Twitter accounts. Tweeters and posters beware: big brother is watching!

The IATA reported a rate of only one accident per 1.4 million flights, meaning that statistically you could take a flight every single day and not get into an accident for 3,859 years. Only 2006 saw a safer year and since 2000 the accident rate has dropped 36%.

“Safety is the industry’s number one priority. Even in a decade during which airlines lost an average of US$5 billion per year, we still managed to improve our safety record. Last year, 2.3 billion people flew safely. But every fatality is a human tragedy that reminds us of the ultimate goal of zero accidents and zero fatalities,” said Giovanni Bisignani, IATA’s Director General and CEO.

There is still room for improvement in certain key areas, however. Pilot handling was a contributing factor in 30% of all accidents, while runway incidents (called “excursions” by the industry) and ground damage accounted for 26% and 10% of all accidents respectively in 2009. The IATA has proposed a variety of safety programs to address these and other risk factors.

“Safety is a constant challenge. Having made aviation the safest way to travel, further improvements will come only with careful data analysis. We must understand the underlying safety risk trends, not just from the handful of accidents each year, but by bringing together and analyzing data from millions of safe flights. The IATA Global Safety Information Center was launched in December 2009 for just that purpose. Going forward our goal is to work with other organizations and governments involved in aviation safety to add to the database and drive even more improvements,” said Bisignani.

Now if they could just do something about flight delays.

U.S. airports will now be randomly swabbing the hands of passengers to check for traces of explosive materials. You may be familiar with this technique as it was previously used with carry-on baggage of some passengers.

Soon now, though, travelers can expect to see the increased random use of ETD [explosive trace detection] technology in different areas, including checkpoint lines and at boarding gates. Officers may swab a piece of luggage or passengers’ hands, then use ETD technology to test for explosives. The swab is placed inside the ETD unit which analyzes the content for the presence of potential explosive residue. To ensure the health of travelers, screening swabs are disposed of after each use. Since it will be used on a random basis, passengers should not expect to see the same thing at every airport or each time they travel.

This measure has been put into place in response to the attempted bombing of Northwest Flight 253 on Christmas day. Currently, the TSA has more than 7,000 ETD machines and has purchased 400 additional units with $16 million in federal stimulus money. The president’s fiscal 2011 budget calls for $60 million to purchase approximately 800 portable ETD machines.

But can’t terrorists wash off trace amounts of explosives with soap and water? Apparently not. The ETD can detect race elements “down to the nanogram — or billionth of a gram,” making it nearly impossible, no matter how many times hands are washed, to completely rid oneself of traces of explosives.

What exactly are the machines trying to detect? The official TSA list is classified. But it probably covers any commonplace explosive you can think of, including fertilizer, nitroglycerin (used in dynamite), C4, TNT, RDX, and PETN, the chemical used by Umar Farouk Abdulmutallab on Christmas Day.

Other security measurers are also being implemented in airports across the country. Backscatter x-ray and millimeter x-ray machines are currently being used in a handful of airports, while hundreds are in the process of being put into place by the TSA. Privacy groups, however, are up in arms about the technology, which is part of the reason they are not more commonplace in American airports. For more on this discussion, check out the March issue of Risk Management in which we feature an article titled “Airport Security: Privacy vs. Safety.”

It looks as though the Treasury secretary may soon have a role overseeing individual financial companies. In a move to help monitor systemic risk throughout the financial arena, Senator Chris Dodd (D-Conn) is looking to release a bill next week that would overhaul financial regulation with sweeping reform.

Lawmakers and government officials have agreed that Washington should be working to identify risky activities that could threaten the entire system — a job no single regulator had during the lead-up to the financial crisis.

But because of the financial crisis, that job may now fall under the Treasury secretary’s duties, an idea both Dodd and Senator Richard Shelby (R-Ala), both of the Senate banking committee, favor since “the Treasury secretary has a higher international profile than most regulators” and because that position is more accountable to Congress.

Dodd’s new proposal represents a shift for the senator. Last fall, he introduced a bill that would have created a separate Agency for Financial Stability. Dodd envisioned an agency responsible for identifying, monitoring and addressing systemic risks and with the authority to break up large, complex companies if they posed a threat to financial stability. He called for it to be governed by an independent chairman, appointed by the president and confirmed by the Senate, as he said, “to provide insulation from political manipulation.”

Shelby and other conservatives did not completely support the idea of a new agency. Dodd then “embraced the idea of a council of regulators, with the Treasury secretary at the head.” But this bill will, and has, drawn criticism referring to the opportunity for political influence to play a part in the position.

If the bill should pass, it would mark significant milestone by granting a Cabinet member a measure of regulatory authority. For even more on this topic, don’t forget to check out the April issue of Risk Management, in which we will feature an in-depth piece on banking regulation and risk and what is being proposed by the Basel committee.